September 2025 could either be an inflection point where the market starts delivering stratospheric gains or cools down abruptly. If interest rate cuts start again as expected, the change in monetary policy will alter how investors invest. Having more exposure to Dividend Aristocrats is a good idea at the moment. These stocks have had their dividend payouts raised for over 25 consecutive years, meaning their underlying businesses can perform in both good times and bad times.
Plus, dividend stocks tend to do better when interest rate cuts happen, as Treasury yields slide and the risk-free yield no longer remains competitive. There are ~69 Dividend Aristocrat stocks you can buy today. Only a handful of them are worth reaching for. Here are the top three:
Realty Income (O)
Realty Income (NYSE:O | O Price Prediction) is a real estate investment trust (REIT). When a company is typified as a REIT, investors usually get spooked, especially those who have lived through 2008. However, the market has learned significantly from it, and the real estate market was not dented by aggressive interest rate cuts, even as many other rate-sensitive industries cratered.
Realty Income is perhaps the strongest REIT you can buy and hold. Retail real estate constitutes ~80% of its portfolio, with the remaining tenants being diversified across multiple sectors. The company has started to diversify into data centers, too. Retail is a sturdy facet of the broader economy, so Realty Income has managed to maintain occupancy rates over 95% through recessions. Its occupancy rate was 97% in 2008.
The company’s dividends are similarly dependable, with 30 consecutive years of dividend hikes. The dividend payout frequency is monthly, with the annualized yield at 5.47%. It’s perfect for retirees and long-term holders. Once rates get cut more, Realty Income can start marching back to its highs near $80. I expect ~35% upside within two years.
PepsiCo (PEP)
PepsiCo (NASDAQ:PEP) hasn’t done the best in recent years, mainly due to the broader snacking industry reeling from the GLP-1 drugs, which suppress appetite. However, the impact is quite overstated, and some companies have actually maintained their sales. PepsiCo is one of them, having increased its sales from $67.16 billion in 2019 to $91.75 billion (12-month trailing) as of Q2 2025.
The market takes issue with growth slowing down and a decrease in margins. These trends are reversible in the long term, as PepsiCo continues to dominate the snack aisle. I see the current dip as a one-in-a-decade buying opportunity. It is still down 25% from its 2023 peak.
Activist investor Elliott Investment Management believes the same. It recently took a $4 billion stake in the company, saying that PEP stock could deliver “at least a 50% upside”. This would bring it back to 2023 highs, and beyond in the long term.
PEP stock has a forward dividend yield of 3.87%. Dividends have been increased for 54 years consecutively, making it a Dividend King.
IBM (IBM)
IBM (NYSE:IBM) has delivered significant gains in recent years, and you need to pay a premium for the stock. Having some tech exposure in your dividend portfolio is still worth it, especially if it is a company as dependable as IBM. The coming decades can transform it from a boring consulting company to a cloud + quantum computing powerhouse.
Quantum computing has long been IBM’s strong suit. The company pioneered quantum computing in the 80s. It is now seen today as the “next big thing” after AI. IBM stock could be the Nvidia (NASDAQ:NVDA) of the future if quantum computing becomes commercially viable. Nvidia CEO Jensen Huang believes quantum computing will start solving real-world problems much sooner than he initially expected. Quantum computing companies are targeting hyperscalers and AI companies, since they are willing to pay significant amounts for even a slight edge in performance.
IBM is already seeing growth tailwinds from hybrid cloud and AI. Q2 revenue increased 7.7% year-over-year and beat analyst estimates by 2.32%. Net income surged by 19.6%.
IBM has a 2.73% forward dividend yield and has increased its dividends for 30 consecutive years. The forward payout ratio is 56.33%.
Top Gaining Stocks
Top Losing Stocks